StatsCan says 42,000 jobs — not 200 — were created in July

Statistics Canada issued what it said were the correct job creation figures for July, fixing the error it made last Friday. Most of the jobs gains were in the service sector, and among youth. Ontario was a big winner, gaining 39,500 jobs.

Canadian investors cheered after Statistics Canada said the economy added a whopping 42,000 jobs in July, not a meagre 200 as previously stated in its erroneous report last Friday.

Ontario was one of the biggest beneficiaries gaining 39,500 jobs in the revised version, up from a previously reported 15,100 job gain, the new report showed.

The national unemployment rate inched down a tenth of a per cent to 7 per cent as previously stated, the corrected report also said.

The Canadian dollar, which initially rose a third of a U.S. cent, closed up 0.12 of a cent, at 91.84 cents.

Coming on top of recent increases in exports, retail sales, and housing starts, the new, improved figures eased last week’s fears the labour market had inexplicably stalled.

Further cementing that view, manufacturing sales rose 0.6 per cent in June to $52 billion — the fifth increase in six months, Statistics Canada also said Friday in a separate report.

But while the new jobs data was seen as a big improvement over last week’s disappointing figures, economists said the long-term trend in Canada’s labour market remains relatively weak.

The economy has generated just 157,000 jobs since a year ago, less than a 1 per cent increase, and most of them have been part-time, they noted.

“Despite the massively better revision, the trend remains soft with average (monthly) job growth over the past year of just 13,100,” economist Benjamin Reitzes, at BMO Capital Markets, wrote in a note to clients.

In comparison, the U.S. has added 2 million jobs, all of them full-time, over the past year, economists noted.

Statistics Canada also published an account of what caused last week’s unusual error in one of its most high-profile monthly economic reports.

The agency was conducting a $5 million major redesign, which occurs every 10 years and involves an update to a processing system. During the change, one of the programs was not updated, which it attributed to human error.

As a result, Statistics Canada said it overstated the number of full-time jobs that were lost.

The error was quickly identified and corrected, the agency also said.

“I am fully confident in the integrity of the Labour Force Survey program. This was an isolated incident,” Chief Statistician Wayne Smith said in a statement.

Harper government critics saw the blunder as the latest evidence that ending the mandatory long-form census, along with cuts to the agency’s budget, are hurting Statistics Canada’s credibility.

“The further away we get from a reliable long-form census, the more blurry things get. This is a warning shot that we need more reliable benchmark information, which can only come from the census. It is the spinal column of any data to do with people in this country,” said Armine Yalnizyan, economist with the Canadian Centre for Policy Alternatives.

Some Bay Street economists were prepared to give StatsCan a pass on what they saw as a rare glitch.

“I think it’s unfair to criticize Statistics Canada’s credibility because of a one-time human error,” TD Bank chief economist Craig Alexander, a former StatsCan employee, said in a telephone interview.

“I think it’s highly unlikely the budget cuts have weakened the Labour Force Survey,” Alexander added, saying that along with inflation and the gross domestic product, the jobs data are among the agency’s most closely watched releases.

“They have an awful lot of importance for policy makers and business. I’m sure they’re investing heavily to ensure the quality of those releases is the best,” Alexander said.

The new, more encouraging data lifted the Canadian dollar as markets reacted to what was seen as a major improvement over the incorrect information Statistics Canada released last Friday.

The revised figures were not expected to have an impact on the Bank of Canada’s interest rate policy. The central bank’s trendsetting rate has been at an ultra low 1 per cent level since September 2010.

The main correction was in the number of full-time jobs, which fell by 18,000, not 60,000 as previously reported. The gain in part-time jobs remained at 60,000, the agency said.

Ontario Economic Development Minister Brad Duguid was downright giddy about the new numbers, saying it as the best job numbers Ontario had seen in almost a year. “This is a pretty significant boost in jobs in Ontario.”

While an improvement, the latest figures indicate employers are not creating enough new full-time jobs to keep up with population growth, Erin Weir, economist with the United Steelworkers, wrote in an email.

Most of the jobs gains were in the service sector and among youth.

In July, there were more people employed in educational services and in information, culture and recreation. At the same time, employment declined in construction as well as health care and social assistance.

The construction industry shed 39,000 jobs, not 42,000 as previously stated, and is down 3.4 per cent for the past 12 months, mostly due to declines last fall.

An internal review of what went wrong and how it can be avoided in future will be conducted under the direction of two senior agency officials, the director general of methodology and the director general of economy-wide statistics, the agency said Friday. Their findings are expected to be made public within the next two weeks, the agency said.

The labour market survey is based on a survey of 56,000 households. The results are then adjusted to create a profile that represents the entire country, including changes in seasonal demand.

The report is considered Statistics Canada’s most timely and comprehensive snapshot of the economy as it’s produced shortly after the month ends and measures hiring across all sectors, regions and age groups.

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